GE Seeks Refund From Enron Wind
General Electric Co. is seeking the refund of almost half the $358 million it paid to an Enron Corp. unit for wind-turbine manufacturing assets, lawyers told a federal bankruptcy judge in New York on Thursday.
After its auditors analyzed the transaction, GE informed Enron that it wanted $160 million back, Enron attorney Martin Sosland disclosed in court Thursday. Sosland is representing Enron in its bankruptcy reorganization.
GE is the largest maker of power-generation equipment.
The outcome might be of interest to other purchasers of Enron assets, including UBS, Switzerland’s biggest bank, which bought the trading business in 2001 for a share of future profits; and YTL Corp., Malaysia’s biggest construction company, which bought another subsidiary, Wessex Water, for $1.77 billion in May.
“It’s standard procedure,” said Dennis Murphy, a spokesman for GE Power Systems, who confirmed the company’s refund request.
“Purchasers have certain protections built in. If the purchase price didn’t accurately reflect the value of the asset, we can petition,” he said.
Murphy declined to comment on what GE auditors discovered in the transaction to prompt the request.
Sosland told U.S. Bankruptcy Judge Arthur J. Gonzalez that Enron would fight the refund request.
GE won a court-supervised auction April 2 after increasing its offer to Enron Wind Corp. by $100 million, beating out Caterpillar Inc., among other bidders.
Gonzalez approved the sale to the GE Power Systems unit for $325 million in cash and about $33 million in assumed debt.
The sale closed in May, and GE touted the transaction in its second-quarter earnings report, saying the deal “established GE Wind Energy as a leading presence in the renewable energy industry, which is growing at nearly 20% a year.”
Although Enron Corp. filed for Chapter 11 bankruptcy protection in December, its Enron Wind unit was a profitable business.
The Tehachapi, Calif.-based company, one of the world’s largest wind turbine operators, saw sales soar to more than $800 million last year from $50 million in 1997, Chief Executive Adam Umanoff said.
Enron Wind filed for Chapter 11 protection before the court auction so the sale would be overseen by a bankruptcy judge.
Enron Wind was formed when Enron bought Zond Corp. in 1997 for about $100 million in cash and stock as part of a plan to develop a renewable energy unit using new technologies to generate electricity from the sun, water power and wind. That plan was abandoned.
Just before the sale to GE, Enron Wind employed about 1,600 people at 14 sites around the world, including manufacturing plants in Germany and Spain.
Enron had planned to spin off the unit in an initial public offering, according to Umanoff.
Shares of Fairfield, Conn.-based GE gained 41 cents to close at $24.50 on the New York Stock Exchange.